As part of our core portfolio, we like to invest in speculative assets such as Cryptocurrencies. There is a huge range of Crypto investors looking for returns, with some being super skeptical and some going all in. For us, we have invested around 10% of our portfolio in Cryptocurrencies and related assets such as NFTs.
We think Cryptocurrencies as being in the early stages of its development, with regulations still trying to adapt to this evolving technology and how it would fit in within our economy. Bitcoin, the Gold Standard for Crypto, has seen a fair share of extreme volatility over the past few years, where people have made a lot of money but at the opposite side of it, more people had lost a lot of money.
However, Cryptocurrencies have evolved and changed to a dominant position with a market cap of $2.7 Trillion - that is Trillion with a capital T. Not to mention, Cryptocurrencies have now become a trend and lot easier to invest in, with new Crypto exchanges popping up left and right everyday. The number of people investing in Crypto is now 1 out of 10, and it's not difficult to dispute that Crypto ecosystem is here to stay. The pandemic possibly had a significant impact on the Crypto market, with developments in technology accelerating and the new normal relying a lot more on online presence and transactions.
With all that was said, we don't see Crypto going out of business. We personally foresee Crypto evolving to become a new way of conducting transactions in the future and that there is huge potential for the blockchain technology in general. We don't know how or when, but we have positioned our portfolio for long-term investing and the mindset that even if we lose some value of our investments in Crypto, we will be ok. Though, we are hopeful that our long-term predictions of Cryptocurrencies are going to be positive and it's a chance to invest in a technology that is disrupting the financial industry and how we see money.
Without further ado, let us share how we are investing in Crypto and how we plan to make passive income while at it.
1. HODL and DCA
Perhaps the most common way people are investing in Crypto is the buy and hold strategy. The hope here is that the investment will appreciate in value that we will realize capital gains.
Bitcoin alone made a gain of 300%+ and Ethereum appreciating 1000%+ in the past year. The S&P 500 and Dow Jones hardly shows up on the above graph in comparison. That's not to say Crypto will continue outpacing Index Funds by a long shot, as we all know there were times when Bitcoin had crashed before, and who are we to say that won't happen again? With Bitcoin and Ethereum, we have less than a decade worth of historical data vs. S&P 500 which we have 100+ years.
While there was much uncertainly about the Crypto space prior to 2020, this time is different. Yes, the famous words in finance. The world has gone through a once-in-a-lifetime pandemic situation and many people see Crypto as a viable investment with the direction technology is becoming even more integrated in our daily lives.
While we believe in Crypto, we are not going to put all of our eggs in one basket. we have allocated a fair bit of our portfolio of 10% to 10+ Cryptos, including Bitcoin, Ethereum, and other large market cap Altcoins. We have managed to invest a large chunk during the dip, but now we are dollar-cost averaging (DCA), using NDAX's "reoccurring purchases" function. It's a nifty tool where you can set how much of which Crypto you want to purchase on which day, either weekly, monthly, etc.
2. Earning Cryptocurrencies
Instead of having our Cryptocurrencies sit idle in the wallet, another way to earn money passively is to stake out your Crypto and earn reward in Cryptocurrencies. We personally like to use Binance, as it provides one of the highest earning potential of up to 100% on hundreds of different types of Crypto, including stable coins! Though honestly speaking, you do need to jump through some loopholes to get that lucrative rewards, so on average, you can earn 10-100% APY. The best part is that your rewards gets paid DAILY and gets compounded DAILY.
What we like to do is first purchase crypto in our Binance account with USDT until a certain amount, and then transfer the Crypto to our Binance account earn wallet. You can continue to keep your Crypto in Earn wallet and keep earning, or you can transfer them to Spot balance and start trading. Use the link here and deposit $100 to start trading and earning Cryptocurrencies and BITCOIN.
3. Bots Trading | Algorithmic Trading
There is another way of trading without you actually trading, and that is letting bots do the work. To be honest, we are also relatively new to this and trying to figure out what works best for us. Two platforms that we have tried out are on KuCoin (free with account) and BitsGap. If you are proficient in Python, you can setup your own Cryptocurrency Trading Bot. Basically, how it works is that there is an algorithm that sells high and buys low as per the pre-defined set of rules multiple times a day so that you can lock in realized gains/losses. It's not a perfect set up where you make money all the time, especially if there is a large drop in the price of Crypto - however, it can lessen your losses if if you design your Trading Algorithm systematically.
We are still testing what works best for us and will keep you updated on the progress!
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